The geopolitical landscape has shifted dramatically this year, stemming from the United States’ and Israel’s decisions to launch military strikes on Iran.
The global energy sector is struggling with what analysts described as the most significant supply issue since the Suez Crisis in 1956. Crude oil prices have surged as the conflict directly threatens the world’s most vital energy arteries.
For investors navigating this fog of uncertainty, a clear-eyed understanding of the immediate impact on supply chains and price benchmarks is essential.
Escalating Tensions and the Impact on Global Rising Prices
Global oil prices were rocked after both the U.S. and Israel launched military strikes at the end of February. As of mid-March, Brent crude oil traded near $105 per barrel, up more than 40% since the war began.
After the initial strikes, International Monetary Fund managing director Kristalina Georgieva said that a 10% increase in energy prices would continue to push up global inflation by 40 basis points and slow global economic growth by 0.1-0.2%.
The sudden lack of access to the Strait of Hormuz has forced a massive turnover in energy assets across different countries. Market analysts are watching for looming deficits in different countries and potential long-term stagflation.
Upside and Downside Scenarios
Market experts are divided on the trajectory of crude prices, ranging from a swift cooling to a catastrophic price spike.
Macquarie analysts predict that oil prices could climb to $150 or more, even if the Strait of Hormuz is closed for just a few weeks. Addressing this upward price pressure will require a combination of diplomatic policy, military protection of trade routes, and a massive logistical overhaul.
What’s more, an analyst from UBS remarked on potential key risk scenarios, such as a sustained disruption to shipping routes through the Strait of Hormuz, which could push oil prices toward $150 per barrel.
Helima Croft, RBC Capital Markets, head of global commodity strategy, also suggests that the war between Iran and the United States could last far longer, which would break the record of oil price highs of $128 per barrel in 2022 during the Russia-Ukraine conflict. An emerging “war of attrition” scenario would indicate an even higher peak, with Croft mentioning that the price of oil could surpass the 2008 record of $146 per barrel.
On the other hand, some countries such as the U.S., Canada, and Japan have released oil reserves as part of an IEA-coordinated plan to add 400 million barrels to the global oil supply this month. A total of 32 countries have committed to help as part of this plan.
And yet, this provides only a short-term solution.
The plan can temporarily cover the current loss of 8 million barrels per day (mb/d) for about 50 days.
But if the flows through the Strait of Hormuz are reduced to zero, the supply would only last for roughly 20 to 26 days.
If the conflict is prolonged and more help is needed, global oil importers could run into trouble as non-OPEC+ producers, like the U.S., require several months to add any additional production. Therefore, immediate supply shortfalls cannot be instantly resolved by boosting domestic U.S. output.
Citibank suggests that in an optimal scenario, if the conflict is contained and shipping routes reopen, Brent could moderate back toward $68 per barrel by the third quarter of 2026. Similarly, forecasts from the analysts at DBS Bank expect Brent crude to average $68 next year.
The Strait of Hormuz: Chokepoint of the Global Energy System
All scenarios point to the closure of the Strait of Hormuz as the central variable, and the consequences would extend well beyond oil.
A prolonged shutdown would disrupt a wide range of critical inputs to the global economy, with ripple effects felt across metals, agriculture, automotives, and other key sectors in both the U.S. and broader world economy.
The aluminum market offers a telling example: Matt Meenan of the Aluminum Association noted that 21% of U.S. aluminum imports have already been affected by the Iran situation, and industry concerns are likely to deepen if the conflict drags on — a fluid and fast-moving development.
Who is most affected by disruptions to the Strait of Hormuz?
Asian countries.
According to Statista, China absorbed the largest share at 5.4 million barrels daily, followed by India, South Korea, and Japan at 1.6–2.1 million each, while the U.S. imported around 400,000 barrels per day through the strait.
In short, due to strong domestic supply, the U.S. itself has not been severely impacted, but allies South Korea and Japan have been, which is why their stock markets have dipped in the past few weeks.
(Statista; Quarter of Maritime Oil Trade Flows Through Strait of Hormuz)
What Traders Are Waiting For: Key Market Catalysts
The market is now in a “wait-and-see” mode, awaiting specific triggers that could cause oil to jump or plunge.
A critical factor is Iran’s Kharg Island, where U.S. forces destroyed military targets on Friday. Kharg Island is the hub for 90% of Iran’s oil exports, and the potential destruction of key infrastructure assets has long been seen as a key vulnerability for them.
On one hand, if the U.S. destroys Iranian oil infrastructure and other key assets, it’d cripple the economy and cause serious long-term resentment, hindering prospects of a peaceful resolution.
On the other hand, Trump is keeping this as an option as a threat to force them to the bargaining table.
So far, it hasn’t worked.
In the meantime, traders continue to watch and see if one side caves and de-escalates.
Not sure what to do in the meantime?
Many investors are using gold to protect purchasing power when fiat currencies face inflationary pressure from rising commodity prices, so this could be an option for traders on the fence.
For those willing to take the plunge, BTSE offers oil perpetual futures with up to 50x leverage and settlement in stablecoins, as well as 24/7 trading with advanced order types for precision control.
Maximize your capital efficiency and trade oil perps with leverage on BTSE.
